All set to go? All right, thank you. Thank you everyone for joining us this afternoon. Obviously thank you to the team broadly speaking. I see a handful of people here from ModivCare. Joining me on the stage today is Heath Sampson, President and CEO of ModivCare. You know, we met with Heath earlier today. We had a lot of great conversations, so I thought I'd just walk through kind of some of our conversations from earlier. Most notably just starting off and kicking off with, I thought, just a broad overview of the three lines of business. Mm-hmm. Kind of some of your initiatives and, kind of coming off of Q1 and what your thoughts are within each of those business lines, what your kinda growth priorities are? Okay, great. Yeah. Well, thanks for having us. This is my second year, and you guys have been good partners, and it's a good conference. Yeah. I really appreciate it. Thanks for coming as always. Thanks. Second year here, when you think about these last two years and specifically for us first from a strategic perspective, I'll get into this in more detail around each of our business lines. In the supportive care space, all of our lines are in that. Why I want to bring that up first to talk before strategy is kind of where healthcare is going. I think everybody that's probably sat up on this stage. Mm-hmm. especially somebody that's in healthcare services that is in front of the clinical side, it is a great opportunity for companies like us because access, quality and cost, the conundrum of the triangle, the services that we do really do change outcomes down the stream. That's from a strategic perspective why we're so excited. To do that, there's a lot of work that we have done and need to do. With the strategy then, with that vision on where healthcare is going, with the strong backdrops of what's happening in the U.S. healthcare system, we have a two-pronged approach. One, I'll get into that, to capture that future value of changing outcomes and improving primarily cost and access. Really our individual point solutions. Those individual point solutions should be at scale, should be at the right cost, which is typically the lowest cost, with the best member experience. Those solutions are in about 60% of our business is called mobility or is non-emergency medical transportation. We're the largest. We're about 40% of the market share, and we're across the nation. Those services that we provide anywhere from somebody that needs heavy service around an ambulance, all the way down to just needing a sedan to take them to appointment just down the street. Across the board, really those services, that business again, about 60%, the target margin's around 9%-10% of a range. The other part of our business and these, the we bundle these under the home division, but there's two segments within that. Personal care, where those personal care services where we offer all the supportive care services of everyday life, and we're one of the largest within that space, but concentrated in the, in the Northeast right now. The other side of the home business is monitoring business. Devices in the home, whether that's emergency devices or monitoring devices that help people with glucometers or blood pressure. Those suite of services are what we have, which we call supportive care services. The strategy is to grow those with the market tailwinds we have, rigid margins under a rigid payment model, 'cause those are all offered both within Medicaid and Medicare under current structures. That's a great base to build on to grow. Tying back to the future is all those services within the people that utilize those services, those are typically the people that are most sick, whether that's LTSS, and really need transportation, need personal care, and need devices. There's not a lot of people that bring that together. We're gonna bring that together both from an efficiency perspective, it gets to the second part of the strategy. When you have access to those people in their car, in their house or with a device, you can start collecting data and impacting outcomes. That's why we're really excited about the strategy, grow within the current point solutions. Mm-hmm. rigid margins, take advantage of where healthcare is going. That's good. How do you kinda ring-fence the kinda the market or the total addressable market, if you will? I mean, how large is that? Yeah. Is there a, you know, a data point out there that references what is that total addressable market? Yeah. Well, it's interesting. We'll I'll give you the individual point solution. From a personal care perspective, it's a $55 billion market. Yeah. Wow. Wow. Transportation, $9 billion market. Yeah. On the monitoring side, about a $9 billion market as well, all growing at rates higher. Wow. When you bring them together and go beyond the services just that were point solutions, that market is growing and much larger too. Mm-hmm. Lots of opportunity to grow within the point solutions from a market growth perspective, as well as especially when we bring them together. From a competitive balance perspective. Mm-hmm. I mean, who effectively within each of these segments do you kind of compete with? There's probably not a traditional single platform, I imagine. Yeah. From having the assets we have, there's really nobody that has all the assets we have. Mm-hmm. Within each of our point solutions. Yeah. There's a number of competitors. Mm-hmm. Do a very good job, which I think is good for the industry, especially where healthcare is going, what I talked about. Yeah, there are. From a size perspective, again, we're number one in transportation/NEMT, again, 40% of the market. There's a number of players that are kinda 20% down. In the personal care side, there's probably three or four large- Mm-hmm ... companies. We're one of those large companies. publicly on this- Yeah ... stage, probably Addus, as you know, and a great company. And then on the monitoring side, specifically in the PERS or personal emergency device, there's probably three, and we're kinda one or two from a size perspective. Okay. The good obvious things is that we're one of the largest that's within that... Right ... which gives us the scale. Mm-hmm. Relationships, but at the same time, to your, to your question before that, within the addressable market, still a lot of headroom to grow. Yeah. Okay. Digging down a little bit on NEMT, I know there's been a lot of, you know, questions that came up on Medicaid redetermination. Mm-hmm ... which kind of kicked off April first, if you will. Mm-hmm. You've given us some parameters. Mm-hmm ... 10%-50% risk potentially on the membership- Mm-hmm over the next, I think, it's four or five quarters. Mm-hmm. Can you just elaborate on that for us and kind of how you're thinking about the risk and you've given some other data points around it as well? Yeah. The good thing for us is we have been planning for this for multiple years. It's just kinda hit everybody in the face these last couple months. Yeah. For us, we've been planning for this for the last number of years. It benefits us coming out of COVID, and also it allows us to be proactive in Medicaid redetermination. Mm-hmm ... that's happening now. The good thing of this for us, we're aligned with all our specific states and understand what needs to happen. Part of what we prepared for is changing how we contract with our states. Yeah ... and our payers. That primary is a move to a kind of win-win relationship. Mm-hmm. When there is a fluctuation in utilization, which would redetermination would be, the cost, which could relate to redetermination, those we share. We're protected from a margin perspective on the P&L. That's an important point. That has happened and some of the stuff that we talked about prior to COVID, we would've had a lot more exposure. Mm-hmm. About 60% of our contracts plus were exposed in the event that this happened. Benefited us during COVID. Yeah. Now we're down to 20%. That 20%, we know where they are, we have relationships with them. Based on historically how we have reset and redone pricing, we feel really good our ability to. Mm-hmm ... partner and manage through that with each of the areas. Okay. You know, I know this is a question I, and I've gotten to contract payables as an extension of that. Yeah. A little bit of a headwind in Q1. We've talked about a headwind Q2, but it kinda turns positive second half of the year. Yeah. Can you just, again, elaborate on that for the audience? Well, it's a really important point, and you really have to dive into our contracts. Yeah ... to make it as simple as possible. Starting off the bat again, with the changes we've made, the margin, the P&L is protected with these changes. Why is that the case? Because we actually we throw it on the balance sheet. If there's a change and it's higher, we it's a payable. If it's lower, it's a receivable. Looking at the receivables and payables is an important part. Mm-hmm. Right now, as we're moving through that, because of the movements in the receivables and the payables, it's causing gonna cause the near term working capital timing issue for us. Yeah. When you break that apart, it's timing. Mm-hmm. Looking at those is really important. I do think for this quarter and what I said for next quarter, those timing things are gonna hit us. Yeah. The cash flow generation that each of these business lines have are there, and you'll see that improvement in Q3 and Q4, where we will be generating cash flow as well. Okay ... those rates that we talked about before. Outside that, you know, your initiatives really on the NEMT side. Mm-hmm ... targeted at, assuming are the, you know, transportation and cost, the outsourcing and the. Mm-hmm, mm-hmm the call. Yeah. Cost of calls. You talked about getting down from low forties. I guess sequentially you were down in the quarter, right? Yeah. from a cost perspective... Taking it forward. Yeah. The initiatives are taking hold. Yeah. You can see that in the numbers, and I expect that to continue. It's tangible items that we've implemented. Now it's just about scaling them. Mm-hmm. The team has done an amazing job, and the initiatives that we can go through, probably at a later date, are showing high member satisfaction as well as allowing us to take out cost as well. Which is why we reaffirmed our guidance and reaffirmed our long-term margin targets as well. Mm-hmm. Long term, when you're talking about getting, I think it's from roughly $40-$42 a unit, if you will. Mm-hmm ... getting down to high 30s, which I know is important to your margin story. Yeah in NEMT. What are you thinking in terms of timeframe when that can happen? It's already improved, so quarter-over-quarter. Yeah. You're gonna see a quarter-over-quarter improvement. That high thirties is over the next couple years. Okay. we continue to anchor back to what we said for 2025. Good guide. Good guide, guide. Good guide, yeah. those guidance that we give there will have that kinda straight lined up to that guidance in 2025. Right. That's a big part of that initiative to get to 300 at the end of 2020- It is. ... through 2025. Yeah. Okay. jumping around a little bit, but, maybe you could just elaborate on pipeline and your reference. Mm-hmm. I believe you're really looking for- Mm-hmm ... a little bit of a headwind potentially. Mm-hmm ... pre-determination, but you feel you can offset it. Mm-hmm either new opportunities or existing state MCO. Can you just elaborate on that as well? We've implemented a new kind of go-to- market strategy that focuses not only on our current customers, but also on customers that we haven't talked to. That is paying off. We just signed a large payer that is definitely top 10 that we weren't talking to four months ago. Another one that I announced there is in similar nature, not to that size. Growing beyond our current customers and growing within our current customers is happening and is a priority. There's a lot of opportunity to do that, like I talked about with the market size. We're really bullish on our ability to expand, and it's again, a driver on how it gets us ahead of redetermination and even grow above that. Okay, great. Flip it over to personal care. Mm-hmm. your thoughts on kind of what it is, you know, a platform that seems very scalable. Yeah. -depending on kind of the resources and caregivers and retaining caregivers and so on. Yeah. You just talk about, really, I'm very curious. I think you had an eight, 9% growth in the quarter if I, if I'm correct. Yeah. Yeah. Yeah. What can that be, if you will? You know. That's it. The business eyes on that is the market opportunity is large. State, the federal government, everyone that knows that this is an important service to quality and access and also to outcome changes. That market is very large. Primarily made up of mom and pops, but there are companies like us that have really grown in that space. What that's allowing us to do is to centralize and standardize kind of the back office, free up those dollars to reinvest back in the caregiver, whether that's wages or whether that's benefits like a cell phone. Mm-hmm. It's we're in the middle of that centralization and standardization. The benefits of that are twofold. Strong margins. Mm-hmm. Get to the higher end of our 10%-12%. Mm-hmm. Probably more importantly, being able to recruit and retain outside of the market, which will allow us to grow fast. Mm-hmm. That business we're really bullish on. The team's done a great job in 2023, like it is in mobility. Mm-hmm. Yeah. Mm-hmm. Yeah. Finishing off these initiatives are critical. That's key. Is the retention or retaining caregivers or expanding just that footprint, is that the key to it ultimately? It is. It really is that. Yeah. Got it. Got it. I don't mean to minimize that because it's the retention and the hiring, but it's also what they are doing. Yeah. The services of whether that's giving a bath or helping with meals. Mm-hmm. As importantly is upskilling them, supporting them with clinical resources as well as technology to change outcomes. These people are in their home for three hours to all night. Mm-hmm. These are the sickest people. They have the best ability with support, with a tablet that's easy to see change in conditions, get in front of it. It is enabling that caregiver with our services and technology that is as important as retention and-. Right. recruiting. Okay. Thank you for that. Remote, you acquired Guardian. Mm-hmm. I mean, how. Mm-hmm. Can you speak a little about digging into the acquisition, how the acquisition plays into your-? Yeah. kind of your strategy and your initiatives on it? Remote patient monitoring, that team and a lot of the data that we have around that is the tip of the spear on our value-based care. Mm-hmm. The bulk of the business right now is personal emergency device. It's the device that someone hits when they need help. Mm-hmm. The difference for us is that we have technology and a care center behind that. The nine out of 10x when they hit that button, we engage with that member. Engaging with that member that a lot of our customers or payers have a tough time getting with. We can collect data and push information that automatically will allow us to get paid differently, whether that's a bonus payment or some type of sharing of risk. We term that the E3 platform. We get the benefit, again, of the fee for service, the revenue in for every person that we have on a monthly basis. Now, because of the ability to collect data and change outcomes, that's really expanding. Mm-hmm. It's probably our biggest cross sell across mobility is really how do we get this service into our 36 million members that we currently have on the, on the transportation side. Oh, is that right? Yeah. That's the overlap there. Yeah. It's a lot of great work that the team has done. Yeah. It's a top priority for a lot of the innovation that we're doing. Mm-hmm. Understanding that member, having the technology to do that on a dynamic basis is really important. Mm-hmm. In fact, we've invested a lot in that technology, and we actually just acquired a company called Higi, who their. Mm-hmm. their technology platform is superior and is really gonna leapfrog our abilities to dynamically monitor and manage all these members across the country. Okay. We had talked about this a little bit earlier, but on the call side, you're saying, you know, just roughly. Mm-hmm. it was $4 per transport call. Yeah. Does that play into that equation? It really does. There's a couple. Where you're going, there's a cost side- Yeah. and there's the strategy side. By having 27 million calls a year just on the transportation side- Mm-hmm. that shows, wow, you get a lot of engagement. Yeah. Think about that. That's a lot of engagement that allows us to collect data, push data. On the cost side for us, on the transportation side, a lot of that is just happening via phone. Mm-hmm. 27 million calls, $4 a call. The majority of that for mobility business is via phone. We have an initiative that is taking hold right now, is to how do we make the member experience better by sending a text message, understanding that member so when they pick up the IVA, "Mrs. Smith, do you have an appointment?" Leveraging technology, an app, to improve member experience, but that'll also take at least a third of those calls away. Mm-hmm. $27 million x $4. Yeah. It's a win-win. Yeah. Right. Yeah. That's a place to do it. As far as the footprint, am I thinking about correctly, taking the three primary lines of business, is the biggest opportunity absent just in terms of scale, just expanding the footprint into new states, new MCOs? Is that really where it's at, or is it right now it's addressing the models in your given markets, obtaining your margins, and you have the footprint from, you know, your three lines of business, do you need other incremental- Yeah ... lines? Well, no, I don't think we need other incremental lines. Yeah. Our services we have are the top supportive care services. Mm-hmm. They're the ones that change outcomes. Yeah. Right now, executing is critically important in the footprints we have. Mm-hmm. There's a lot of runway. Mm-hmm. This is why we're confident in our three and three, and even growing beyond that. Eventually, we wanna be national across all of it. Right. They're both critical, it's just a timing issue. It's a timing issue. Yeah. Okay. can you walk back, if absent contract payables, kind of how you think of kind of capital allocation? Mm-hmm ... you know, the acquisition so far, Mm-hmm ... debt reduction, where you want, where your leverage profile. I know you've talked about your leverage targets and so forth. Mm-hmm. How do you think of as you're here today, you know? Capital allocation critical. Great teammates that have helped us get to where we are. We have a great debt structure right now. Fixed rate debt that is proving very well. We have a line, strong line. The acquisitions we made really over the last kinda 18 months were large. Like, we made a couple big, large acquisitions, but that leapfrogged our ability to execute on the strategy that I articulated before. We're at the point now that we knew we were gonna be at our highest point of leverage. It's too high. 4.3x. Right. Again, we knew where we are, and it's, we're consistent with saying that, but we'd like that down. Our, our 3x target is the right- Mm-hmm ... is the right target to do. And why we feel good about that is because of these point solutions generating cash- Yeah. being CapEx light, that we are. Capital allocation for us, get the debt down. Yeah. At the same time, ensure that we have the flexibility to take advantage of the growth that I talked about, whether that's investing in technology and investing in de novos. Mm-hmm ... investing in people, and then eventually investing in buying new companies. Okay. Great. Thank you. Are there any questions in the audience? I do want to address any questions, if anyone has any, as we're kinda going through. If not, I can just kinda keep rattling on here. No? Okay. The 25, the three by three for 25. Yeah. Mm-hmm. The keys to getting there. Mm-hmm ... from kind of the $235 this year. Mm-hmm. you know, how, what takes us to that point? If you were to say the top three-? Yeah ... data points. So - Initiatives ... the good thing is, from an initiative perspective, it's about execution. Mm-hmm. There's not, "We need to create a new technology. We need to create a new business model. Mm-hmm. The initiatives are in place, though early, we need to execute. That's gets us 75% there. The other component is selling, right? Mm-hmm. We need to ensure that our current customers, which make us who we are today, we were pretty concentrated. Mm-hmm. We need to expand outside of that. Our go-to market strategy, our One ModivCare strategy that enables us to sell and expand across the country and customers that we currently don't have, it's critical too. Mm-hmm. Selling and executing, right in front of us, all controllable. Mm-hmm ... which is a great place to be. A lot of work. Yeah ... what we get paid for. The cash generation, you deploy it back into the business, so to speak. Yeah. Yeah. Is that really, if I think about the churn of cash, you get into second half of this year and 2024. Yeah. It is. It is deploy, and we're doing that right now, right? If you look at it, we are been putting back into the business right now. As we come out of this COVID/Redetermination/pricing- Mm-hmm that is hurting the kinda timing of our capital in Q1 and Q2, we'll be back to those going away, generating cash, and be back to really generating cash after that. Mm-hmm. A chunk of that will be deploying back in the business, a chunk will be delivering and. Yeah ... and then providing us the broader opportunity to do other things. Okay. What from a risk perspective, do... I get asked this question occasionally. Mm-hmm. Do the Ubers and Lyfts of the world or any other derivative present- Mm-hmm ... any challenges to the NEMT model? So, um- What, I should say, what's the value prop that they can bring? Yeah. To the table. Yeah. first off, they're our partners. Yeah. I view them as that, and they view us that way as well. Yeah. if you talk to them, how they get into the space of Medicaid and Medicare. Yeah ... is working with companies like us. They're our partners, and I expect to continue to grow with them. The differentiation for us, the ride is one component, right? One component. The engagement with the member, I talked about the phone call. Yeah ... or the app or the IVA, IVR, and/or the engagement with the provider, or I mean, sorry, the MCO or the state. Yeah. Mm-hmm. That claims billing, that process-Uber and Lyft don't do. Right. That's right. That's not their business model. Their business model is to do what they do well. Our business is to do that well. Yeah ... ensure that the member experience and how we do healthcare with our payers and other state customers is what we do and what they don't do. Yeah. That's the differentiation. Then the last one, this gets back to tying to the strategy. We wanna that member or person in the car or in the home, we wanna collect data on that. Mm-hmm. We wanna have the best member experience and then collect the data to help improve that person's life, lower cost, provide access, and of course, support the customers. Right. that's just not what they do either. Mm-hmm. Again, they're big partners of ours. Right. I presume, again, back to that value proposition of the MCO or the state and/or Medicaid, where does that... I mean, is it a continuous discussion? Is it a continuous process in terms of managing pricing, behavior, contracts? Yeah. every discussion I have with a payer or state, the first thing, and maybe the second thing, and for sure the last thing, is member engagement and member satisfaction. Mm-hmm. That is top of mind for a minute. That, that has really shifted over the last couple years. And it's also in some of the requirements that come out of CMS. The quality requirements that are coming to our MCOs are, yes, clinical, but they've changed, as you know, to engagement and member sat. The government is requiring our payers to think differently about their members' quality and engagement, and that's what's happening with us. Yeah. That's, that's top. If we do anything to help them with that far outweighs anything around pricing. Pricing's important. I think across our portfolio, the pricing's hit the right level. pricing's down the road- Yeah ... as long as we have high member satisfaction. The member satisfaction, that is, I presume, an important dialogue for you to report back to your. Critical dialogue. How do you do that, if you don't mind me asking? Historically, and currently, the primary is unfortunately complaints, right? Yeah. It's a good metric 'cause it allows it to happen right away. Right. That's the biggest item, especially in transportation, which is just challenging in general. That's kind of across the board in kind of all healthcare services, usually when you do something wrong. It's changing though now. Yeah. now it's surveys, and we talk about our NPS scores in outside of transportation, specifically in monitoring, our NPS scores are in the eighties. Mm-hmm. It is now becoming two-pronged. The bad complaint side, which we are very good at, and then actually with engagement, you can start measuring satisfaction. Yeah ... and with technology, and that's a big part of where the industry's going. Right. Okay. Again, if there's any questions, feel free to raise your hand. Can you just walk us through, and if something I kind of overlooked or... The transition from the full risk to the shared risk model... Yeah. Yeah. ... the 60 to 20, and how that's been a, obviously, a priority- Mm-hmm ... and is an important priority going into- Mm-hmm ... Medicaid redetermination. Maybe you can just discuss that. It should be- Yeah ... The way we contract, again, that's mobility centric, which is mobility NEMT, which is 60% of our business. The other 45 is the home business. Yeah ... centered on mobility. Within that, the big change that we have made is moving to this win-win relationship with our payers, which gets to moving from a fully capitated full risk contract to a shared risk contract. That moving to 20% is allowing us to really have stable, rigid margins. Mm-hmm ... regardless of utilization and cost, 'cause it really is about the member experience. That's. Though, again, from a working capital and timing. Yeah ... paying that back- Mm-hmm ... 'cause the payables and receivables range from anywhere- Yeah ... from 6 to 18 months. Mm. Yes, that's a near-term capital issue. Yeah. We are aligned now. Right. Based on that contract structure, we feel really good about our future and even managing. Right ... redetermination. Moving away from that full capitation, if you will. Yeah ... mitigates the risk of that contract- It really does. ... the volatility around the payables- Yeah ... and receivables. Yeah. The true win-win. Yeah ... relationship that we have. Yeah. One other question I meant to touch on earlier that I'm thinking about through this. The multimodal partnership model on the transportation side. You referenced that a key part of that margin- Yeah ... opportunity is narrowing. Yeah ... you know, your counterparty for your partners. Yeah ... in that business. Yeah. You're, I guess, you went from 11% to 17% in move shift into that model. Yeah. I mean, where can that go? Is that all part of that kind of 40 to high 30s equation? It is. Okay. Yeah. It's that multimodal partnership model. Yeah ... which is really the people and owners of these cars ensuring that they're partners of ours. Yeah. We ensure they make money, we ensure they abide by our values and our commitment to the members, so we can start collecting data. They do very well, we do very well. Just by doing that, ensuring partnership and coordination is a critical part on how we're able to lower the cost, and also increase the quality. That also includes Uber and Lyft. Yeah. That also includes mass transit. Right. That also includes driving yourself and getting reimbursed. Yeah. It depends on the member and how to fit that member to the type of transportation we have. Yeah. Okay. Well, great. Thank you. Thank you. Yeah. If there any other questions, we're happy to field them, but I don't think we have any. Thank you. Thanks to the team. Yeah. The whole team's helping join. We really appreciate it. Okay. Thanks for having us. Okay. Thank you.